binve (< 20)

Update on the Dow/Gold Ratio and a few more Gold Ratios

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Here is an update on my Dow/Gold Ratio chart. The original post, with a *very* detailed explanation of what the DGR means, and what my projections are for both Gold and the Dow can be found here: The Dow / Gold Ratio

Here are some other key Gold Ratios and the historical and relative performance. I had said that I would write a dedicated post about these someday, but I didn't. The chart is pretty self-explanatory though.

IMHO, 1:1, if we reach it, would most likely occur in the neighborhood of $3,000 to $5,000. I'm retaining a more conservative interim target of 2:1 in the neighborhood of 5,000 Dow to $2,500 gold. If that pans out, I may begin GRADUALLY reducing my precious metals exposure starting around $2,500 gold and moving into the cheapest stocks with staying power that I can find at the time. I will most likely retain some substantial exposure to target $3,500 and higher and $100+ silver, but some portion of my 90% precious metals allocation will start coming off the table soonafter the $2,000 milestone.

>>IMHO, 1:1, if we reach it, would most likely occur in the neighborhood of $3,000 to $5,000. I'm retaining a more conservative interim target of 2:1 in the neighborhood of 5,000 Dow to $2,500 gold. If that pans out, I may begin GRADUALLY reducing my precious metals exposure starting around $2,500 gold and moving into the cheapest stocks with staying power that I can find at the time. I will most likely retain some substantial exposure to target $3,500 and higher and $100+ silver, but some portion of my 90% precious metals allocation will start coming off the table soonafter the $2,000 milestone.

I very much like your projections. I am in agreement. I do think the crisis peak will be more than 2:1, but I agree with you that a 2:1 ratio represents a very nice risk/reward profile to start getting into quality equities. I will be begin looking strongly and good divided yielders once we get to those levels. I also agree. I see a target of ~4000 for the Dow when this crisis has run its course.

By that, I mean I see the DGR at 1:1 or maybe even 0.5:1 at the very height of the move. I bet that will be when either the Gold is moving up *very* fast (or the Dow is dropping *very* fast), so capturing that peak will be difficult at best. So I too like 2:1 as an entry point.

So I have to rethink the gold thing, after looking at those charts. Silver will be a better investment after gold takes off (probably), but will physical silver be readily available at the premium slingshot opportunity? Or, will I be able to conveniently trade my gold for silver after gold does it's thing?

I just skimmed it for now and will look a little closer shortly, but it was fantastic from what I could tell perusing it for 5 minutes or so. Also, thanks for the shout-out, although clicking your link didn't take me where I wanted to go. I had to copy and paste it.

Those are *very* good question. Myself, ChrisGraley, and TMFSinchiruna explored that topic in this post http://caps.fool.com/Blogs/ViewPost.aspx?bpid=316831. In particular, silver is not warehoused at all like gold and if there is a pickup (even small) in legitamite investment demand and people want physical delivery (don't buy SLV, it is a POS), I doubt it will be available. There are a lot of facets to that question with no clear answers :(

Col and I are of a similar mindset. We are both very bearish on the economy and we both have similar long term projections. Here is my long term projection (in it I have P3 starting in July, but I think based on the last week that there is a strong possibility it started now): Reviewing the Larger Count